How To Buy Term Life Insurance

Buying term life insurance is a wise decision, especially if you have people who depend on you for support. Here are a few tips on how to go about shopping for this important coverage.

You'll want to determine the amount of coverage you need. Unfortunately, many people delay purchasing life insurance because this seems like a difficult thing to figure out. Don't let this stop you. There are different ways financial advisers suggest that you can go about this to get a ballpark idea that will help you when shopping or talking to an agent.

One way is to add up debts and future expenses (including funeral costs) such as education costs, plus the amount of yearly income you think your family would need to maintain their standard of living. Then subtract out survivor benefits, savings and other life insurance resources. You can also talk to your family, or use an online calculator to help. Once you get some quotes, you should verify with a financial adviser or agent that your coverage will be adequate.

Determine the length of the term. The term is the length of time you are covered, which can be anywhere from 1 to 30 years. 20-year terms are most common, but it depends upon how long you think the need is. For example, maybe you only need it until the mortgage is paid and the kids are out of college.

Comparison shop. Term life insurance rates can be different from one company to the next, and comparison shopping could save you quite a bit. Try to get at least three different quotes. So where do you buy term life? You can check with your employer, call agents out of the phone book or go online. One helpful resource is an online comparison site. These sites will let you enter your information into a single form, and then provide several quotes back from agents in your area or other companies.

Check the financial stability of the company that gives you the quote you like. You want to do business with a company that will be around if needed, and pays claims in a timely manner. There are rating agencies, such as A.M. Best, Weiss, Standard & Poor's that have Web sites with ratings of various insurers. Also, check with your state's department of insurance to see if there have been any complaints.

Make sure you fully understand your policy. You can always run your quotes by a local agent and get their opinion. And many companies come with a "free look" period that allows you to examine the policy for a certain number of days and return it if you don't like it.

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